Overview: There are states in US applicable for local taxes. Few states need special configurations within Oracle HCM Cloud to enable tax deduction with local taxes. This article will explain, how to make the changes in Oracle HCM cloud to achieve this. Local taxes in this context means the taxes based on county or city.
We will review the configuration set up in two different ways for implementing the taxes of county or city in Oracle HCM cloud application.
Below are two states with applicable local taxes.
- Michigan state, Detroit city
- Indiana state, Adam county
Default setup of “State Income Tax” in “Calculation card rule” page
- County Tax Withholding Rule: Only counties under county tax rules
- City Tax Withholding Rule: Only cities under city tax rules
Payroll run result of Michigan state employee.
Payroll run has NOT deducted the city tax. This is unexpected.
Change the “State Income Tax” configuration on “Calculation card rule” page
- County Tax Withholding Rule: All counties
- City Tax Withholding Rule: All cities
Payroll run result of Michigan state employee.
Payroll run has deducted the city tax. This is expected.
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This is generic change at “State Income Tax” configuration. We do have option to add the local tax deduction rule for specific city or county.
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Below example will be explain how to setup the local tax specific to county.
Payroll run for Indiana employee with default setup
Payroll run has NOT deducted the county tax. This is unexpected.
Create the Calculation Component specific to county tax.
No Change in “State Income Tax” configuration.
Payroll run for Indiana employee with changed setup
Payroll run has deducted the county tax.
Hence, these are the specific configuration to enable the local taxes deduction if it’s not happening with default setup. Hope this article will help you to address a similar scenario in your Oracle HCM Cloud Implementation.
